this is mark zandi. >> tom: that's "nightly business report" for monday, december 27. i'm tom hudson. goodnight everyone. stay warm and we'll see all of you again tomorrow night. "nightly business report" is made possible by: this program was made possible by contributions to your pbs station from viewers like you. captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org >> more information about investing is available in "nightly business report's" video "how wall street works". to order this dvd, call 1-800- play-pbs or visit online at shoppbs.org. >> be more. pbs.

mark zandi, a respected economist with moody's, had this to say -- quote -- "normally i would firmlyee that raising taxes on people who make over $250,000 a year would not make a meaningful difference in the way that they spend money, but he went on to say, i worry that these are not normal times and that even this income group may be sensitive." end of quote. now, obviously, these are not normal times when you still have almost 10% of the people unemployed, a fragile economy and what this congress does has consequences and we ought to be very, very cautious how we approach it. fifth, we have c.b.o. saying that the gross domestic product would be as much as 1.4% higher in 2011 if all the tax relief of 2001 and 2003 is made permanent. if the tax relief is only for lower-income americans, as is proposed by the amendment before this body, and by people on the other side of the aisle, then according to c.b.o., the g.d.p. would only be 1.1% higher in 2011. some people may think the difference between 1.4% and 1.1% of more growth is insignificant. let me tell you when it comes to 10% unemp

i know mark zandi and i disagree with the conclusion. there is demand side keynesian stimulus i don't think will work or produce those results but the worst thing we can do is have across-the-board tax increase on everybody. i don't see the bill as a stimulus but as further damage done to the economy, not injecting pro-growth to the economy. i don't see it as what zandi esees it as, but if we don't pass it we'll have damage. >> i understand that the stimulus has become a politically-loaded word but why isn't it a stimulus? tax cuts are a stimulus. you think they're the best kind of stimulus. >> look, only in washington is not raising taxes considered a tax cut. nobody is getting a tax cut here. we're not cutting taxes. we're preventing tax increases from occurring. if we're actually cutting tax rates, then we might have a stimulus. we're not cutting tax rates here. we're simply preventing them from being increased. that's why we do not see this as particularly stimulative. it prevents bad policies going forward. >> chris: congressman van

that according to mark zandi, the chief economist for moody's. mr. president, for those who are concerned about the deficit, as i am, job one is to get this economy growing more strongly. that is job one. then we've got to pivot and deal with the long-term plan to deal with the deficits and the debt. as i noted before, the one provision in this package that i am particularly unhappy with is the estate tax provision. i support the continuation of the 2009 level with an estate tax exemption of p $3.5 million for an individual, that would be $7 million for a courages and the a rate of 45%. only .25% would be subject to any estate tax in 2011. .25% of estates would be affected. that means 99.75% of estates would be exempt from any estate tax under the levels that i am proposing and did propose in the budget. unfortunately, under the compromise package, certain of our colleagues on the other side insisted that the exemption level be raised to $5 million for individuals or individuals n for couples with a rate of 35%. this will reduce the number estates su

people like mark zandi an economist that advised john mccain said without the stimulus package the unemploymentrobably be 12% now. one of the main reasons the president did this package was so he could get $56 in unemployment spending, unemployment benefits for another year into the package. they are very effective as stimulus. finally the only reason he agreed to the weakening of the estate tax was -- which will have almost no affect on economic growth was that was the republicans price for agreeing to continue tax credits for working poor families rather than raising taxes on the working poor, even as people at the top of the income scale continue to get tax cut wind falls. >> governor rendell before we go i want you to do tonight's rewrite for me. i want you to imagine you were one of the democrats who spend last week rejeking this deal and in the end you would vote for this deal. how would you rewrite your objections into a statement announcing you're in favor of the bill. >> can i object to evisceration of estate tax and giving millionaires a tax cut, but we had to protect the working peop

mark zandy and others. they are saying about as much as half a percent. that could translate into jobs, real jobs, lasting jobs. so i think the president got and i think the republicans got a much bigger stimulus than expected. the disappointment, john, is that they haven't done anything hard about the deficit. it was not accompanied by any action to show that they are serious. now that we've had the candy, what about the castro oil we're going to have to take next year? it's going to get tougher on the middle class next year. by the way, i think the rich are going to have to pay more, too, as they should. >> and that is the question. what a lot of democrats think, for the next two years, you're not going to get a tax increase so when you get around to dealing with the deficit, where does that money come from? >> the people sitting here who are dealing with homeless issues, foreclosure problems, going after food stamps, trust me, come february, they are going to feel this is where the cuts are going to come from. if you're secretary arnie duncan, and demo

. >> well, i haven't said it but outside consultants, mark zandi and others have said that, and there's no doubt that when you create economic growth, you also create hiring, and that's our goal. >> o. and what about the big issue that appears to be on everybody's mind, certainly the midterm elections spoke to it, and ha is the deficit and the debt. this will add another trillion dollars, so how do people take the administration seriously when they talk about trying to -- >> christiane, first of all, understand that much of this was baked into people's computations because it's an extension of tax cuts that were already on the books. there were about 350 billion in new tax cuts. yet they're all temporary. they're all temporary and the biggest thing we can do to help right ourselves is to get robust economic growth. without that our deficit situation is going to be materially worse, so in the long term these are not going to have impacts on our deficits for the next few years, it will. >> and the u.s. can live with that? >> well, i think that what the u.s. can't live without is robust ec

unemployment -- increasing unemployment benefits quicker than tax breaks for millionaires, according to mark zandi and most every economist, even those on the right don't believe that that's false. u.i. benefits are 400% more stimulative than tax breaks for the wealthy, according to mr. zandi. but on wednesday when my esteemed and effective colleague from ohio, senator sherrod brown came to the floor and asked unanimous consent for just a one-year re-authorization of unemployment benefits, the other side objected. and as you said, mr. president, when you were speaking as a senator from minnesota on the floor a few minutes ago, the anomaly, the republican party is saying we don't have to pay for tax breaks for the millionaires, but we have to pay for an increase in unemployment benefits. what kind of logic is that? the middle class, mr. president, is worried. they're worried about how they are going to stretch that paycheck. they're worried about how they are going to make that mortgage payment. they're worried about how they are going to keep that job. and this, this recession, middle-class people

that according to mark zandi, the chief economist for moody's. mr. president, for those who are concerned about the deficit, as i am, job one is to get this economy growing more strongly. that is job one. then we've got to pivot and deal with the long-term plan to deal with the deficits and the debt. as i noted before, the one provision in this package that i am particularly unhappy with is the estate tax provision. i support the continuation of the 2009 level with an estate tax exemption of p $3.5 million for an individual, that would be $7 million for a courages and the a rate of 45%. only .25% would be subject to any estate tax in 2011. .25% of estates would be affected. that means 99.75% of estates would be exempt from any estate tax under the levels that i am proposing and did propose in the budget. unfortunately, under the compromise package, certain of our colleagues on the other side insisted that the exemption level be raised to $5 million for individuals or individuals n for couples with a rate of 35%. this will reduce the number estates su

now, this is mark zandi mood moody's moody'seconomic.com about what the g.d.p. increase is generated by $1 of stimulus going to these various things. food stamps are the best. for every $1 we put into food stamps $1.74, we get a g.d.p. of $1.74. people spend the foot stamps on food. most of which are grown produced processed packaged, shipped and bought in america. unemployment benefits is next to that $1.61 g.d.p. increase for every $1. unemployment benefits, they're not using these to buy a mercedes. they're not using these to buy a new high-definition 3-d flat screen tv made in japan. they're not using these to buy a gold encrusted diamond studded rolex watch plaids in witsland. -- watch made in america. extending the bush tax cuts, for every dollar we put into it, we get back 32 cents of g.d.p. growth. that's what the republicans want. why if we're trying to stimulate the economy would we put $1 into something that only returns us 32 cents when we could put $1 into unemployment benefits and get $1.61. or how about infrastructure investments, get back $1.57.

. >> as you know, independent congressmen like mark zandi say this will add 1%. to economic growth next year. you have progressives -- some of the most prominent republicans saying this will help lower income and working americans. and look at the polls, as well. gallup poll yesterday. 66% of adults support extending the tax cuts for everyone, including a majority of democrats. >> first of all, that poll is fascinating in that it shows if the president goes out and sells an idea, it can be pretty persuasive. but if you looked at before this deal was even done, it was two-thirds of the american people believed you should extend the tax cuts for the middle class and let the other tax cuts go for deficit reduction or other programs. that's exactly the point i'm making. with two speeches and a press conference, the president was able to move the american people. he didn't do that before this deal was struck to try to get a much better deal to line up the american people behind him. that's the regret i have. not that there aren't good things in the deal, george. there

i don't know if i can remember all the names, but mark zandy from the center for american progress, greenstein's group, and a number of economists talking about it. it would increase the number of jobs by about two million. what the vice president said clearly based on the stimulus people, talking about how many jobs it would create, he said i don't do that anymore. that is why they ask others to render their opinion. but it is something that is not done yet. let's make that clear. we are working through it all. one last question. >> at one point it was said that the tax cuts would not be extended. can you tell us -- >> i am not going to say this for fear it would interfere with my caucus doing what they feel is appropriate. but i am going to do what i think is right when it comes down to it. i hope that answers your question. >> are you confident that you will sign off and your people will sign off in the end? >> no. i think we are going to have to do more work on it. >> do you think you will have to take things out or put things in? >> the deal between president obama and congressional leaders

mark zandi on his economic analysis, i've frequently relied in the past, has encouraging projections. he sees this package hagd a full percentage -- adding a full percentage point to economic growth next year. he's especially optimistic about the new business deductions, potential to spur spending. many fact, he predicts that unemployment will reach below 9% by the end of next year and will close in on 7.5% by the end 2012. these figures are all significantly better than what we'd expect without this legislation. this wasn't the bill that i would have wanted. if there were a better way, i would do it in a heartbeat. but today we are forced to decide between taking a stand against irresponsible tax cuts for millionaires versus helping struggling families. given that choice, i simply can't turn my back on all minnesotans that desperately need the help that this bill will provide. thank you, mr. president, and i suggest the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call: the presiding officer: the senator from iowa is recognized. mr. harkin: mr. pre

mark zandi pegs it at 25 cents on the dollar. every dollar and foregoing -- forgone revenue, all expect 25 cents of economic activity. you can understand the macroeconomics. the federal reserve says the u.s. industry is running 75% capacity, massive underutilization of labor and equipment. you have very little incentive for a business to invest right now. they have a very high capacity being unused. on the margin, what will make them invest more, i think less than supply side effects -- really demand. if they know the american consumer has money in their pocket, the american consumer is employed in doing well and seeing wages increased, then they will be able to buy, then you create demand and when you see the man you are forced to use of capacity and and and and invest in new capacity. it is unclear why it happened. very popular with the chamber of commerce. business tax extenders tend to have a lot of bipartisan support. it is similar to but not very. if you really wanted to address the u.s. economy and get back to potential yo

mark zandi, an economist republicked on the left and right, senator mccain's chief economic adviser when he ran his campaign said that every dollar spent on tax breaks for the millionaires generates .32 cents of economic activity. those of us who believe on economic efficiency, which i do, that doesn't work. let me give you a contrast. every dollar spent on unemployment benefits -- excuse me -- generates $1.61 in economic activity, so if you care about getting the economy going, you'll be for increasing unemployment benefits rather than tax breaks for millionaires. even economists on the right don't believe that's false. they are 46% more stimlative -- excuse me. on wednesday, when my esteemed colleague from ohio, senator brown came to the floor and asked for concept of a one year authorization of the unemployment benefits, the other side objected, and as you said, mr. president, when you were speaking as senator from minnesota on the floor a few minutes ago, the anomaly, the republican party is saying we don't have to pay for tax breaks for the millionaires, but we have to pay for an in

and kiran and t.j., you've talked to mark zandy before, he said this could potentially reduce the unemployment country to 8.5% by the end of next year. which tells you why the white house is so interested in this. >> in some ways it's a gamble, but we'll have to see how it works out. thanks, jim. >>> an a.m. original for you. the hottest music star on the planet and he's only 16 years old. >> you know who we're talking about. at least you know the hair if you don't know anything else. justin bieber. he's a huge star who is now taking that stardom and doing something with it. trying to make a good impression, trying to do some good out there. a charity, a priority. alina cho here. the bieb? >> the bieb bieber fever. >> do you have it? >> she does now. >> i most certainly do. good morning. justin bieber, listen to this, he is up for two grammys, he recently swept the american music awards, no question. he is a huge star. but what was most surprising to us is that even at the ripe old age of 16, backstage, he's already building a history of giving back. >> reporter: justin bieber, he's hot, hot,

indeed forecasters as well as economists like mark zandi suggested that this bill will help maintain the fragile recovery and could lead to a one point drop in the unemployment rate and perhaps as much as 1% increase in g.d.p. in 2011. as compared to previous baselines that took into account only the extension of the middle class tax cut and expiring provisions like the alternate minimum tax. there is from experts considered opinion that this will help grow the economy, reduce the unemployment rate, put people back to work. the bill also recognizes the need to build on the small business lending and tax credit bills we enacted this summer and fall. indeed, the provision to allow businesses to expand 1 -- expense 100% of all of their investments in 2011 is expected to generate $50 billion in additional business investment next year. that's private companies investing in private enterprises to put people to work on private payrolls. the bill also encourages businesses to invest in the future products by the -- to keep us competitive in a very competitive world. the bill also recognizes

we had a number of economists there and i don't know if i can remember all the names, but mark zandi, center for american progress, greenstein's group, and a number of economists talked about this decreased number of jobs by about 2 million. what vice president said clearly based on the stimulus bill with how many jobs it would create, he said, i don't do that anymore so that's why they ask others to render their opinion, so it's something that's not done yet. let's make that clear. one last question, i have to go. >> [inaudible] can you tell us -- [inaudible] >> i am not going to say this for fear it would interfere with some of my caucus doing what they feel is appropriate, but i'll do what i think is right when it comes down it it. i hope that indirectly answers your question. >> are you confident that if you sign off on this, your people will sign off on the deal? >> no, i think we have more work to do on it. >> do you think you'll have to take things out? >> and now senate republicans. republican leader mitch mcconnell says a majority of the republicans support the decision to co

just look at mark zandi's comments. the republican economic advisor to john mccain. you know what he told us? you give unemployment benefits for every dollar you increase economic activity by $1.61 because that money is spent right away at the corner store. you give a huge, enormous tax break to people over a million bucks, you ain't going to spend it. they're going to put it in the trust fund. so let's put that money toward deficit reduction. i think for me, speaking for myself, this post-election session has been one of the most interesting that i've ever seen. because the true colors of the parties are coming out. and -- and i know people get very frustrated about our debates. they want us to come together. i want to come together. i went all the way to the republican side and said the first million of tax cuts -- of income, sorry, will get a tax cut, and only over that, that .1%, let's put that to deficit reduction, and my republican friends won't move that inch over to me. and to us. and at the same time, a blocking action on all those important bills i laid out

mark zandi, an economist republicked on the left and right, senator mccain's chief economic adviser when he ran his campaign said that every dollar spent on tax breaks for the millionaires generates .32 cents of economic activity. those of us who believe on economic efficiency, which i do, that doesn't work. let me give you a contrast. every dollar spent on unemployment benefits -- excuse me -- generates $1.61 in economic activity, so if you care about getting the economy going, you'll be for increasing unemployment benefits rather than tax breaks for millionaires. even economists on the right don't believe that's false. they are 46% more stimlative -- excuse me. on wednesday, when my esteemed colleague from ohio, senator brown came to the floor and asked for concept of a one year authorization of the unemployment benefits, the other side objected, and as you said, mr. president, when you were speaking as senator from minnesota on the floor a few minutes ago, the anomaly, the republican party is saying we don't have to pay for tax breaks for the millionaires, but we have to pay for an in

we know that mark zandi and many economists said the best way to stimulate the economy today, not every day, but today is with extending unemployment benefits. for every dollar that we invest you get almost $2 that. so i would hope anything we come out of here with takes into consideration the millions of people who are desperate during the holiday season for an unemployment check. >> you are supposed to bring up the. >> the question is do i feel in the movement on s.t.a.r.t.? the answer is yes. i feel that, but as far as being able to hear anything that we have things worked out, the answer is no at this point. [inaudible] >> i am confident and hopeful that we can work our way through all of these things. that is, we are going to make sure that we still are going to move forward on the firefighters. we are going to move forward on the d.r.e.a.m. act. we are going to move forward on the 9/11 new york situation. we are going to do something on "don't ask don't tell." we of course have to do something to fund the government through next year or into next year and we have to do something w